Part I was on why budgets are important. Part II is about analyzing the budget data that you collected.
Well you wrote down everything that you spent for 2 months and now it is time to look at the figures. Actually you probably already have looked at the numbers and it probably raised many questions. Like, do I really spend that much money on eating out? Do I spend that much on clothes each month? Is all this necessary?
The answers are yes, yes and yes. You do spend that much. That’s why you don’t save money each month.
Now get another sheet of paper (if you collected the data the old fashion way and wrote it down). Write down each category of expense as a heading, you might need another sheet of paper, or a spreadsheet would work a lot better. Under each heading write down the 2 month total, if you spent 200$ for the 2 months write it under gas.
Look at each heading and the number under it and think about how you could reduce that number. For eating out and buying clothes, that‘s pretty easy just cut back. Well maybe it won’t be that easy but it needs to be done.
Utility bills can always be reduced by conservation such as turning lights out and not wasting water. Keep the air conditioning at one temperature and the same with the heat. Good for you and good for the environment.
The grocery bill each month can be reduced by buying things on sale and by using coupons. The Sunday paper is worth the money for the coupons alone.
Part III will be on creating the budget and using it as a financial tool
